SUPREME COURT—IN BANCO.

Southland Times, Issue 1273, 1 July 1870, Page 2

SUPREME COURT— IN BANCO.

Ditnbdin, Wednesday, 22nd June. (Before His Honor Mr Justice Chapman.) Manning- and Anotheb y. M'Gibbon and Another. — Hia Honor, in giving judgment in this matter, said : — This is ah action brought to enforce specific performance of a contract for the purchase of two stations in the province of Southland; 'The declaration states that at the date of the contract the plaintiffs were the licensees from the Crown of tw o pastoral runs, and that so far as their own acts and deeds are concerned they still are, by virtue of the said licenses (issued under the provisions of the Southland Waste Lands Act, 1865), in possession of the said runs, and entitled to hold possession thereof until the 7th day of August, 1881. The declaration then sets out the contract, dated 14th September, 1869, the terms of which are not imporant, except that the day fixed for delivery was the 14th day of October, 1869. It is next alleged that "at the request, and for the conyenience of the defendants, the plaintiffs, on the 15th September, 1869, agreed to enlarge the time for taking delivery of the said runs until the 21st day of October then next ensuing," and a memorandum of that agreement is set out. The next material averment is, that " the plaintiffs were, on the said 14th day of October, and have been at all tunes since, including the said 2 1st day of October, ready and willing to transfer and deliver possession of the eaid runs, and in all other respects fully to complete and fulfil their part of the said agreement, of which at all times the defendants have had notice." The declaration then goes on further to state that, on the 15th day of October, the day after the day originally fixed for delivery, the Waste Lands "Board of Southland passed a. resolution reserving from sale two blocks of land containing 1670 acres and 4000 acres respectively, out of the said runs ; and a minute of the Baid resolution was then recorded in the books of the said Board. That the Superintendent of Southland, in requiring the said Board to reserve, and the said Board in reserving the said lands, " acted, or purported to act, in exercise of the powers conferred (upon them respectively) by the 36th . section of the before-mentioned Act, in order to provide for the satisfaction of claims which may hereafter be made by Henry Driver and John M'Lean, of Dunedin, contractors, for and in respect of the construction of a line of railway in the said province, being part of the line of railway known as' the Oieti Eailway ; but that the said Driver and

M'Lsan had hitherto done nothing to pntitleiSeni to claim (if the said reservation be v ilid). a £r.mt of the said lands, and thaff in^oonSejqaVrieVofcthe said action of the siid Boird, L th> defendants rev fused to cooaolete their agreement, although, they well knew that the plaintiffs were ready'- And willing to triUisfor the said licensed,** &c. ;{- .. To this declaration the defendants hare pleaded that after the date of' the contract and before the time appointed for deUrerj^fSist Oct.), namely on the 15th of Oct. t the.jjyasjfce Lands B >ai % d reserved, &?. (as atate3tip."Jb»'3eblaration), and that "by reason thereof "the title of the plaintiff 3 to tho sai 1 lihds became defective, and the interest of tho pi lintiflfe in fie said runs became jrea^lv deteriorate Tin^valuvtV^refor? the defendants refused, &i., us they lawfully might." To this plea the plamtiff* have demurred on several grounds, the first o r whichfis not relied on. The others may conveniently be grouoel no dor three heads : — 1. That the alleged reservation of the two blocks of land in the declaration sm\ plea mantioned, does not exonerate the defendants from their liability to perform their pirfeof the contract in the declaration set forth. T'lis is the second ground of demurrer, *and it assumes the legality #f the reservation. 2. That the reservation is void and illegal. This embraces the third an I fourth grounds. 3 That the plea doss not snow that the requirements of the SS'th section have been complied, with. This comprises the remaining grounds. Contracts respecting land in this colony, occapied under the Crown for pastoral and other purposes,' have no exact prototypes in England, and therefore we can only look to cases decided by the Courtsat Westminster for principles capable of being applied to questions in dispute here. One of those principles of universal application is, that upon the execution of a contract between a ■ vendor and purchaser the equitable ownership of. the property passes .at once to the purchaser. The vendor and purchaser are reciprocally trustees for each other — the one in respect of the estate, the other in respect of the purchase money. If both tho vendor and purchaser die soon after the execution of the contract, tho estate goes to the heir of the purchaser, the money to the personal representative of the vendor. . As a consequence of this complete mutation of ownership, all risks as well as all benefits wMch may happen or accrue to the estate after the date of the contract, and before the time for completion arrives, are Bhifted from the vendor to the purchaser. Lord Eldon, in giving judgment in Paine v. Meller, besides deciding the question arising out of the los 3by fire, give 3 some forcible illustrations of the complete change of ownership effected bj the contract of sale. He aays J— »" As to the mere effect of the acciient itself, no solid objection (to a decree for specifio performance) can be founded on that simply ; for if the party by the contract has become in equity the owner of the premises. They are vendible aB his, chargeable as his, capable of being encumbered as his ; they may be. devised as his ; they may bs assets, and they would descend to his heir." The ca*es are very numerous in which 1 both loss and gains happening alter the date of ■ the contract hare been held to follow the ownership. The most striking, and in appearance the hardest, is where the vendor contracts to Bell an estate* either partly or wholly, for an annuity, and dies Boon after (in one case two days" after) the signing of the contract, the purchaser gets the estate, and the annuity is at an end. ffß takes, the risk of toe vendor living to a great age j he is entitled to, the* benefit of his dying to-morrow. "As the risk is his," said Lord Eldon on one ocoaaion, " the benefit also must be hiß." Now, I think these principles are applicable to the case before the Court, with somewhat increased force in favor of \Yie plaintiffs, arising out of the fact that the contingency by which the> value of the estate has suffered was known at the time of the contract. There can be no room for doubt that if the deterioration in value had been produced by an inundation or other unforeseen calamity, the purchaser must have borne the loss. The contingency by which the value of the property has been injuriously affected, was one to which the runs were liable at the time, of the contract. The liability of all funs in Southland to have a portion taken for certain piilio purposes must be taken . to have been known to both parties. The provision* of the 36th section of the Southland Waste Laftds Act, 1865, hovered as a clou 1 over the license. The resolution of the Waste Lands Board no doubt made that cloui hang lower, though it may never descend in the full force- threatened. What the purchasers contracted to receive, therefore, was the runs, subject to the liability imposed by the statute, with such claim; for compel 1 sation a* the 27th section entities them to. With the. statute before them, it was quite competent for the defendants to protect themselves, by stipulating in the contract for rebate, in case the 36th section should be put in force within a certain time, if the compensation of 2s per acre, named in the 27th section, were deemed insufficient. Stress was laid, in the course of the argumentfor the defendants, upon the fact that the resolution was passed by the Waste Lands Board before fche> day fixed for completion. To this it was answered that the day originally fixed waß relied on by the plaintiffs, because the extension of the time was made at the request and for the convenience of the defendants ; but, considering, the principle upon which all analogous (I will not say similar) cases have been decided, I think both these dates are unimportant. It is the contract which, by transferring the ownership, Bhifts alike the risks and the benefits. On behalf of the defendants, Mr Smith relied on the case of Peers v. Lambert, 7, Beav., 546, but that case comes within quite another and a different class of cases, based on different principles. Where two distinct estates or parcels are sold, and the vendor has no title to one, or the title is different to that which he has represented, the Court will not decree specific performance of even a part, and will not. decompose . the Bum fixed for the whole estate, and so bind the purchaser as to his own views or estimate of the relative value j and a fortiori will the Court refuse where the defective part is essential to the beneficial enjoyment of the whole. The ouly exception is wnere the two lots are not complicated with each other, and where the Talue of the defective part ia comparatively insignificant, and compensation can be satisfactorily adjusted. In Peers \. Lambert the facts .were as follows, T|ie vendors put up for sale some property, consisting of a wharf with a jetty," describing the whole as " a very valuable copyhold property ." It wag further described as " copyhold in the manor of Stepney, otherwise Stebonkeath" It afterwards turned out that the jetty was not only not on copyhold land, but was an encroachment, at the time that he entered into the contract, and the master reported that " the jetty wbb essential to the beneficial occupation and enjoyment of the premises." Thus the vendor never had any title, and thiß the purchaser could not know. l But tlie case now before the Court. is not a case- of defective title of part. The enjoyment was subject to a risk which both parties were aware of, though both may have hoped and believed that the contingency might not happen for some years, and possibly not at any time. The case, as I hinted during the argument, is analogous to the liability under which a runholder in this province lie 3, of having part of his run proclaimed a hundred. Both these statutory regulations constitute an infirmity in the title to enjoy which affects the saleable value of all statigns—^they may be regarded as imposing a statutory condition on every contract for the sale of a station. As I consider the plea untenable on the/epond ground of demurrer, it becomes unnecessary to consider the remaining grounds. Judgment for the plaintiffs/. . '. ; „